Closing Grain Commentary 9/13/10

Published on: 16:15PM Sep 13, 2010

Grains closed higher again with corn continuing to make new highs for the move.

Corn has obviously been the upside leader, this will probably continue to be the one most supported on any sort of breaks. So far corn yields have been coming in mixed, but some of the latest reports have been overall better in the last week as many producers are getting to some of their better corn. Crop progress still shows only 11% harvested, which some were estimating to be 12-15%. Harvest will likely speed up at a rapid pace so we should start getting more results this week from the heart of the belt.
Bean yields continue to come in really well. That is why we have seen soybeans lose to corn and we expect this trend to continue. It wouldn’t surprise us to see corn yields come down and bean yields come up from the latest USDA report. Wheat is still concerned about harvesting delays and quality concerns in Canada/Europe.   Wheat’s price is also supported on uncertainty of planting delays in Russia and Ukraine. 
Weekly export inspections were at the high-end of estimates for corn, low-end of estimates for soybeans, and low-end of estimates for wheat. Corn and bean crop ratings both lost one percent in the good/excellent category. Corn did jump to 52% mature compared to the 5 year average of 32% mature.
Looking ahead we could see continued strength in corn. A lot depends on how much money the funds want to keep throwing into our markets, they are already at record longs. Having orders in above the market is a great way to get caught up on sales as the market figures out how far it has to go to ration demand. If the funds continue to buy the basis will likely continue to widen. For beans strong demand has to remain strong to keep the prices we have, otherwise we will probably be heading lower. Even though bean fundamentals remain bearish, more corn strength could be enough to hold beans supported.
For now we like to remain well protected (see hedge recommendations) and continue to monitor yield reports as we get through harvest. Please call your broker if you have any questions.
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